Monday, February 24, 2014

Interesting perspective on the Fed

The nation would
survive without the Federal Reserve, but the Federal Reserve would not
survive without the Deep State. The Fed is not the Deep State; it is
merely a tool of the Deep State.This brings us to the U.S. dollar and the Deep State. The
Deep State doesn't really care about the signal noise of the
economy--mortgage rates, minimum wages, unemployment, etc., any more
that it cares about the political circus ("step right up to the Clinton
sideshow, folks") or the bickering over regulations by various camps.What the Deep
State cares about are the U.S. dollar, water, energy, minerals and
access to those commodities (alliances, sea lanes, etc.). As I have
mentioned before, consider the trade enabled by the reserve currency
(the dollar): we print/create money out of thin air and exchange this
for oil, commodities, electronics, etc.If this isn't the greatest trade on Earth--exchanging paper for real stuff-- what is?While
I am sympathetic to the strictly financial arguments that predict
hyper-inflation and the destruction of the U.S. dollar, they are in
effect touching the toe of the elephant.The financial
argument is this: we can print money but we can't print more oil, coal,
ground water, etc., and so eventually the claims on real wealth (i.e.
dollars) will so far exceed the real wealth that the claims on wealth
will collapse.So far as this goes,
it makes perfect sense. But let's approach this from the
geopolitical-strategic perspective of the Deep State: why would the Deep State allow policies that would bring about the destruction of its key global asset, the U.S. dollar?There is simply no
way the Deep State is going to support policies that would fatally
weaken the dollar, or passively watch a subsidiary of the Deep State
(the Fed) damage the Deep State itself.The strictly
financial arguments for hyper-inflation and the destruction of the U.S.
dollar implicitly assume a system that operates like a line of dominoes:
if the Fed prints money, that will inevitably start the dominoes
falling, with the final domino being the reserve currency.Setting aside the
complexity of Triffin's Paradox and other key dynamics within the
reserve currency, we can safely predict that the Deep State will do
whatever is necessary to maintain the dollar's reserve status and
purchasing power.